Federal Trade Commission (FTC) Chair Lina Khan has been outspoken in her criticism of big tech companies, using a mob metaphor this week to vent her ire at their larger AI ambitions. Speaking at TechCrunch’s StrictlyVC conference in Washington, DC on Tuesday, Khan said the type of lawsuits the FTC files is more important than the number.
“One of the things that’s important to me is to really look at where we’re seeing the most damage,” she explained. “Where are the players that are systematically driving these illegal activities? Being able to go after the ‘mafia bosses’ is going to be more effective than going after the low-level minions.”
Khan has been making waves since being appointed FTC chairman by President Joe Biden in 2021, most recently by trying to ban most employee non-compete agreements and block several large mergers and acquisitions.
Earlier this year, she put the brakes on Coach’s $8.5 billion acquisition of Michael Kors, which would have been the biggest fashion deal of all time. Coach’s parent brand, Tapestry, was in talks to buy Capri Holdings, which owns brands like Michael Kors, Versace, and Jimmy Choo, when the FTC sued, claiming the deal would kill “head-to-head competition.” But when it comes to antitrust cases, Khan’s focus has always been on big tech companies.
Last year, the FTC filed a landmark lawsuit against Amazon, accusing the retail giant of using illegal tactics to maintain its monopoly, and also tried to block Microsoft’s roughly $70 billion acquisition of gaming giant Activision Blizzard, but was turned down by U.S. District Judge Jacqueline Scott Cawley, who said the FTC hadn’t shown the deal would harm competition.
More recently, Khan and the FTC have turned their attention to AI, filing multiple lawsuits against big tech companies, highlighting a recent investigation into Microsoft’s $10 billion investment and ongoing relationship with OpenAI, the $80 billion startup behind ChatGPT. Khan said in January that he was concerned the tech giants “may exert undue influence or gain privileged access in a way that undermines fair competition” in the AI arms race.
Khan’s focus on antitrust litigation has infuriated critics and some investors — Yale professor Jeffrey Sonnenfeld called her a “competitive cop” and CNBC’s Jim Cramer claimed she would be “a one-man destruction squad for your portfolio” — but she isn’t backing down.
Speaking at TechCrunch’s StrictlyVC conference this week, Khan argued that coddling companies deemed “national champions” is the wrong path.
“Historically, we know that some of the most important breakthrough innovations have come from startups and entrepreneurs who can see things differently, and from small companies that can seize market opportunities and disintermediate larger corporations or provide an important competitive check on them,” she said.
The FTC Chairman cited important historical cases where antitrust laws have increased competition and led to innovation, such as the Eisenhower Administration’s antitrust lawsuit against AT&T’s Bell Labs in 1956. After Bell Labs established a monopoly in the market, it was forced to license all of its existing communications patents royalty-free, a move that led to a significant increase in innovation in the years that followed, according to multiple studies.
“We need to keep these lessons of history in mind as we choose our path forward again,” Khan said. “We need to be very wary of these national champion arguments and believe that open, fair and competitive markets are the engines of innovation.”
